Just like our business, your business started with an idea and a plan. Every day you make critical decisions that build on your plan. You face new competition, rising costs and regulatory challenges. This means, that every decision you make, will have a more immediate impact on your success.
Economic Stimulus Acts – A Brief Background
On February 13, 2008 President Bush signed H.R. 5140, otherwise known as the ‘Economic Stimulus Act of 2008’. Through this act, IRS Section 179 deduction limits were increased from $125,000 to $250,000.
The fifth and most recent version is H.R. 4853, also known as the ‘Tax Relief Act of 2010’. This version expanded the IRS Section 179 limits to $500,000 and included a provision that allows a business to take a tax depreciation deduction equal to 100% of the cost of new equipment. The increased Section 179 limit has been extended through tax years beginning on or before December 31, 2011. The 100% depreciation deduction is available on equipment bought before December 31, 2011.
For 2012, all indications are that the allowable Section 179 deduction will drop back down to the pre-2007 $25,000 level and the bonus depreciation deduction will be reduced to 50% of the cost of new equipment.
Eligible New Equipment Purchases
Computers, machinery, office furniture and business vehicles with a gross vehicle weight rating over 6,000 pounds qualify for the deductions. This means, you could purchase a qualified new Ford F-150, Super Duty® or Econoline and depreciate 100% of that purchase on your 2011 tax return!
We have some of our best incentives during our “Truck Event” and many of our incentives are protected with an order. Don’t wait until the last week of December to find out that we don’t have the exact truck you want.
Individual tax situations may vary. Federal rules and tax guidelines are subject to change. You should consult your Tax Advisor for complete rules applicable to your transaction.
The attached Q&A will help you with your plan.
Q. What is a gross vehicle weight rating (GVWR)?
A. GVWR is the manufacturers rating of maximum weight of the vehicle when fully loaded with people and cargo.
Q. Are all trucks eligible?
A. No. All full-size pickups are not eligible for the full Section 179 deduction. In the Ford line up, the F-150 (over 6’ bed), F-250, F-350, F-450 and Econoline cargo van are fully eligible for the 179 deduction. All trucks that have a GVWR of at least 6,000 lbs are eligible for the 100% depreciation deduction.
Q. We want the benefits of IRS 179 yet we don’t want to use the cash and we don’t want to reduce our available credit. Does Ford offer any financing options that will help us?
A. Yes. Whether you need 1 or 100 commercial vehicles, Ford Credit can help you get them quickly and easily with a Commercial Line of Credit (CLOC). Once you establish a CLOC with Ford Credit, you can acquire additional vehicles whenever you need to – just sign and drive.
Q. For our business, we need to modify our vehicles. Are the modifications eligible?
A. Yes. As long as the modifications are included in the complete purchase price. Additionally, we offer various ‘up fit’ discounts for vehicle modifications. See your Local Ford Dealer.
Q. Are extended warranties or pre-paid maintenance programs eligible?
A. Yes. They must be included in the total purchase price. In fact, the Ford Extended Service plan offers various combinations and coverage for commercial use.
Q. Are certified pre-owned or used vehicles eligible for the IRS 179 deduction?
A. Both new and used vehicles are eligible for the Section 179 deduction, but not for the 100% depreciation deduction.
Q. Why should we think about this now don’t we have until December?
A. Our inventories are limited and we anticipate that in late December our ground stock may be impacted by IRS 179. Additionally, we are now in our annual truck sales event. This means that we now have some of our best incentives. Many of those incentives are protected when accompanied by an order.
Q. 2011 was a challenging year for our business; we don’t expect to see enough in profits. Can we carry over the depreciations benefits into future years?
A. The Section 179 deduction is limited to taxable income during the year. You cannot elect to take the deduction if you do not have taxable income. The 100% depreciation deduction can be taken even if you do not have taxable income. The tax loss that is created by the 100% depreciation may be able to be carried over into future years depending on your company’s tax situation. The loss may also be able to be carried back to prior tax years in order to get a refund of taxes that were previously paid.
As always, Fuller Ford offers Lifetime Free Oil Changes on ALL new vehicle purchases – in stock or factory ordered. This includes ALL Ford commercial trucks! Fuller Ford is the Cincinnati Tri-State Region’s commercial truck leader. Whether you are coming from Ohio, Kentucky, or Indiana, we are conveniently located right off of I-75, just west of downtown Cincinnati. Check out our entire commercial truck inventory at http://www.fullerisford.com/commercial-new.aspx.